Opinion: Tax cuts should mean customer savings

Sally Talberg

The Michigan Public Service Commission is wrapping up an extraordinary process that saved significant amounts of money for Michigan utility customers while also showing that government can work to advance the public interest in a deliberate, timely way.

I’m proud of the work the MPSC staff put into the effort to make sure that more than $4 billion in savings that Michigan utilities realized through the 2017 Tax Cuts and Jobs Act were passed back to ratepayers with all due speed. The federal tax act became law on Dec. 22, 2017, lowering corporate tax rates to 21% from 35%.

The MPSC was among the earliest and most aggressive state public utility commissions nationally to take steps to ensure that the federal tax law’s benefits were passed on to customers through rate relief. We insisted that any savings the utilities received from the tax cuts should be passed back to ratepayers, dollar for dollar.

This week, the MPSC approved a $75 million rate adjustment for Indiana Michigan Power Co., marking the commission’s final step in passing savings on to customers through the federal tax cuts.

Stock photo of money

For utility customers, some of the effects have been immediate, with varying bill credits showing up monthly. Additional benefits will be spread out over a longer period, as the tax relief on the utilities’ long-term investments is prorated over the coming years. The tax cuts will help ease the burden on ratepayers as Michigan’s utilities, like others around the country, seek regulatory approval to increase their spending on upgrades to the state’s aging energy infrastructure.

The path to getting rate relief for customers from the tax cuts on the federal level hasn’t been as smooth.

The MPSC has been actively advocating before the Federal Energy Regulatory Commission, or FERC, for federally regulated wholesale energy companies to rightfully return their tax savings to Michigan ratepayers. But unlike our approach at the state level, the FERC process was not clearly mapped out from the outset and has been riddled with litigation and delay.  

Wholesale energy companies suggest they should keep the savings because they’ve changed corporate structures or say they’ll use the money for infrastructure improvements. But they would do so without the transparency and accountability provided at the state level. The MPSC’s energy and financial experts continue to monitor proceedings at FERC and will submit testimony to support getting tax savings passed through to customers.

I hope you’ll join me in acknowledging the work of the MPSC staff. Their work will ensure that the benefits of the tax cuts are passed back to consumers in a transparent way that upholds the MPSC’s commitment to accuracy and public input.

The MPSC’s mission is to ensure safe, reliable and accessible energy and telecommunications services at reasonable rates for Michigan residents. In an age of cynicism, the MPSC’s work to ensure tax savings were passed on to ratepayers represents a great example of government working quickly to benefit the people it represents.

Sally Talberg chair the Michigan Public Service Commission.